UK motor insurance fraudsters target Ireland

UK motor insurance fraudsters target Ireland

Investigators have said that motor insurance fraudsters are now travelling from the UK to stage crashes here in Ireland with the express purpose of exploiting, what they believe to be, the lucrative compensation environment that exists here in Ireland.

The criminals know that Ireland has some of the strictest data protection policies in the world which prevents insurance companies from sharing information on claims histories which has the result of stifling fraud detection capabilities. Coupled with this, Ireland has comparatively high levels of compensation payouts in the court’s system.

It has been claimed by the insurance industry here in Ireland that the rising cost of premiums is as a direct result of insurance fraud but this is not clear.

Paul Holmes, a partner at DWF, a UK-based legal firm, which has recently extended its counter-fraud team to Ireland had this to say:

“We have UK-based fraudsters who we know are coming regularly to Ireland based on intelligence…The reason why they think it is a good jurisdiction is first of all because of massively increased damages they can get compared to the UK and second, because of the lack of data-sharing, they are much more likely to get away with it.”

At the moment, the level of insurance criminality by organised gangs from the UK operating in Ireland is on the increase because they see us as a soft touch. These criminal gangs simulate crashes and file for compensation claims. It is not known, though, exactly how many gangs are targeting this jurisdiction as they are “extremely sophisticated” fraudsters.

The fraud is also transferring in the opposite direction with Irish-based fraudsters also carry out staged crashes in England and Wales.

It is reckoned that organised crime is one of the issues which has led to a dramatic spike in insurance costs since 2011. Since then, Irish consumers have shelled out on average 66 per cent extra on motor insurance premiums and more worryingly, 25 per cent more, in this year to date, 2016.

It is thought that insurance fraud costs up to €200 million a year. Consumers are becoming outraged by these arbitrary increases with any reason given to why the premiums are so high. The insurance companies have pointed to a number of excuses for their price hiking, from unnecessarily high damages, legal costs and shortfalls in anti-fraud measures, particularly in relation to data-sharing.

“Intelligence gathering and sharing is key to identifying fraudulent activity and the working group has examined how the introduction in the UK of the Insurance Fraud Bureau provides insurers with a mechanism for collating, sharing and co-ordinating activity,” he said. “A potential recommendation emerging from our work is around the establishment of a fully functioning insurance fraud database here.”

The Government is well aware of data challenges and is coming under fire from the general public. Currently, the Irish database is considered limited with insurers not permitted to access the data to the level that might flag patterns of abuse.

Along with all these issues, compensation payments remain central to the motor insurance debate. AIG recently released a survey in which they found 78 per cent of respondents believed average whiplash awards of €15,000 are too much. It was suggested that the average cost of payouts should be more like €3,631.

To put these issues into perspective, one has to look at the significant difference between how the British courts deal with compensatory issues compared to Irish courts.

For example, a broken femur has an upper award limit in the UK of €13,668 (Judicial College guidelines) compared with €59,100 in Ireland (Book of Quantum).

That is a staggering difference of 318 per cent. “Successful fraudulent claims enrich fraudsters many times more in Ireland than they do elsewhere.”

Finance Minister, Eoghan Murphy, elaborated by saying, there was now a possible case for reducing damages in Ireland by as much as 50 per cent generally but he went on to suggest that even if there was just a 20 per cent drop, it would “generate enormous savings”.